Rendell says arena deal close but could unravel

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Gov. Ed Rendell said yesterday that state and local officials were "very close" to an agreement with the Penguins on a new arena, but tempered his optimism with a warning that the deal could still unravel and the team could end up in Kansas City.

   
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Gov. Ed Rendell comments on arena discussions with the Penguins:
It's a slow process
The Kansas City factor
If the bid for the arena is more than expected
No city or county money in expanded bond issue
Loyalty of the Penguins fan base

   

At the same time, Mr. Rendell revealed that National Hockey League Commissioner Gary Bettman has entered the talks as a "go between" and "would like to see this brought to a head."

In meeting with reporters before a speech at Station Square, Mr. Rendell said the two sides "keep making progress. We keep narrowing the issues and I think we're very close."

But in the next breath, he said the deal has yet to be completed and that the Penguins could still move next season to Kansas City, where the $276 million Sprint Center is available to them rent-free without any upfront construction costs.

"So it's still somewhat precarious, although I'm very optimistic that we're close. The attitude of the Penguins has convinced me that they want to stay here. We've just got to iron some things out," he said.

While the two sides are "pretty close" to settling disputes over Mellon Arena development rights and parking revenues, they still are hung up over who pays if the cost of the arena ends up exceeding the amount of funding available.

Mr. Rendell said the parties have agreed in "concept and in principal" on increasing the bond issue for funding the arena from $270 million to $290 million. The extra $20 million is a contingency in the event the arena construction exceeds $270 million.

What still hasn't been decided is how the extra $20 million being added to the bond issue is accounted for.

"I am still of the belief that this [arena] can be constructed, including soft costs, for $270 million or less, but the Penguins understandably were nervous about what happens if the bids come in over that," he said.

"So one of the issues we've been dealing with and we've been making progress on is who shares the risk if that happens, what is the division on this if that happens, and we're working on that."

Mr. Rendell said that is probably "the major concern" in the negotiations right now. "I think we're very close to working out an agreement on that," one in which "everyone has to pay more."

The Penguins have agreed to pay for cost overruns but only after a guaranteed maximum price has been established. They declined comment on the negotiations yesterday, as did the NHL.

The arena would be funded under Plan B, the funding formula that includes a contribution of $7.5 million a year for 30 years from Pittsburgh casino winner Don Barden, $7 million a year for 30 years from a gambling-backed state economic development fund, and a contribution from the Penguins. That originally was set at $2.9 million a year, plus $1.16 million annually in naming rights, but has since been lowered. It also included an $8.5 million upfront payment.

Mr. Rendell made his comments before the two losing bidders for the Pittsburgh casino, Forest City Enterprises and Isle of Capri Casinos Inc., filed appeals yesterday to overturn the award to Mr. Barden. The move could further delay the opening of the Pittsburgh casino, which only this week was pushed back from March 2008 to summer 2008, and its revenue production.

However, Allegheny County Chief Executive Dan Onorato said through spokesman Kevin Evanto he did not think the appeals "will have any impact on the arena negotiations."

In his remarks, Mr. Rendell said some people have taken the fact that the Penguins have started taking deposits for season tickets next year at Mellon Arena as a sign they are staying. However, he said it is not a done deal yet.

"We are making progress. If I sounded a little pessimistic, I didn't mean to be that," he said. "I just want everyone to know that it isn't a done deal. There's a little bit of confidence in the air here that it's over. It isn't over yet."

But he also spoke very highly of the Penguins, saying "they're working very, very hard with us. Clearly they're negotiating in good faith. They're tough negotiators."

"[Penguins co-owner] Ron Burkle is one of the most successful businessmen in the country and he didn't get that way by being an easy negotiator," he said.

While he noted there's still a chance the team could move to Kansas City, he added it would be "waking away from one of the most loyal fan bases in the United States of America" if it did so.

He said the Penguins rank among the top teams in the league in terms of tickets sold and share of the television audience.

"In terms of percentage of viewers this is the best market in the country, so they would be walking away from that and walking away from a deal that is a very good deal," he said.

Mr. Rendell previously said the offer to the Penguins is better than any other Pennsylvania pro sports team, including the Pirates and the Steelers, have gotten for a new facilities and also among the best in the NHL.


Mark Belko can be reached at mbelko@post-gazette.com or 412-263-1262.


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